5 Tips to Minimize the Impact of USPS Rate Increases

Catalogers can’t afford a postal rate increase of any size in 2009, yet come May the USPS is raising rates at an average of 3.8 percent. This news comes on the heels of Postmaster General Jack Potter's warning that the USPS is staring at a possible $6 billion loss in fiscal year 2009. The USPS’ costs are unmanageable, and it simply doesn’t have enough Flats Sequencing Systems (FSS) equipment available today to generate savings based on automation. Catalogers don't have the luxury to wait for the USPS to pass along the savings generated from the FSS automation.

The Direct Marketing Association is urging the USPS for significant cost cutting that doesn’t stop at a degradation of service, and for the deferral of the increase itself. Beyond that, catalogers still must act now to ensure the viability of their businesses. So here are five ways to help you minimize the effects of any postage increase this year.

1. Maximize carrier route qualification. Carrier route qualified mail remains a highly effective way of minimizing mail costs despite recent disproportionate, USPS-proposed increases. Mailers with larger circulations will find it easier to have a higher percentage of mail qualify for carrier route discounts. Techniques such as add-a-name or co-mailing, however, allow mailers to raise qualification levels.

2. Test personalized URLs (PURLs) and mobile keywords on mailings, ads and package inserts. Do everything possible to engage with customers through all available channels for the sole purpose of broadening the means of communication. Further develop your digital relationship with consumers by using PURLs, or test mobile marketing using mobile keywords on all printed pieces.

Consumer response is traceable; once consumers have responded, you've established a new ability to communicate digitally. For ads or package inserts, where demand appeared lost in the fog of e-commerce, this could be an exciting reversal of what many viewed as a declining opportunity.

3. Use e-mail to solicit catalog requests. Use e-mail to tell consumers about your next catalog or new specialty offerings. E-mail those who fall below breakeven when mailed to, and offer them a new catalog on request. This works well for reactivation candidates or if you have a reputable partner for e-mail append or e-mail acquisition. If you have an online catalog, link to it from your e-mails.

4. Test booklets and self-mailers. Alternate-size mailing pieces can communicate your offer while qualifying for a lower postal rate. For prospects or those who prefer to shop online, this smaller piece may be all that’s necessary to provoke interaction with your brand and inspire sales. If you’ve tested this before, dust it off and try it again. The economics have changed, as have consumers’ shopping habits.

5. Maximize data quality — hygiene and channel information. Move updates are now required 95 days prior to mailing. In addition, data managers have developed tools linking consumer records and providing better matching capabilities in your merge process. Review your merge logic as well. What worked a few years ago will need adjusting.

Revisit allocation of demand and determine who “needs” catalogs to drive incremental sales. Depending on how or if you're capturing this information, you may not be allocating to the right customer and could be misleading yourself regarding what's incremental demand.

Your best customers who can afford the mailing may not need it, and your allocation of Web demand may be misallocated toward catalog buyers. The right offer and marketing vehicle can influence a lesser-valued customer or an Internet customer to generate more incremental demand from a catalog mailing than your best catalog customer.

Neil O'Keefe is vice president of the catalog and multichannel merchant segment of the DMA. He can be reached at nokeefe@the-dma.org.